In Tough Times, We Need Leadership, Not Interference, From Lawmakers
Likely you have heard about the large and growing budget problem we have in our state. Right now the gap between projected tax revenues and spending obligations is over $6 billion and it is expected this will grow by another $1+ billion by the next revenue forecast in March.
With this significant financial problem hanging over their heads you would expect that the majority of legislators would be spending their time trying to deal with making government more efficient, prioritizing spending, and finding creative ways to stimulate the economy. And most of them are.
Yet in the last few weeks a number of bills have been introduced that have nothing to do with economic recovery. In fact, many are taking direct aim at our technology industry with efforts to hinder the use of RFID technology, put state government in the middle of website privacy policies, and most disturbing—significantly changing how young technology companies get health insurance.
WARNING: Discussion of insurance issue to follow–may be arcane and sleep-inducing.
A little background is in order. The Washington Technology Industry Association (WTIA), like many other trade associations sponsors an Association Health Plan (AHP). Health insurance companies who work with Associations can use “adjusted community rating” to produce the rates and premiums they charge companies under AHPs which allows them to have flexibility from standard rating requirements. A report from a nonpartisan research firm indicated that AHPs are approximately 11% less expensive than the small group market plans. This is different than “community rating” where the pool is one very large group—in the case of an alternative to an AHP – this would be the “small group” market, which consists of all employers, in all industries that have 2 to 50 employees.
Both have advantages and disadvantages. If you buy your health insurance through an Association like the WTIA, you are in an AHP. If you buy your health coverage directly from an insurance carrier outside of an association plan and your company is under 50 employees, you are in the small group market. In the small group market, your experience is spread across a large group so rate increases could be lower if the total group has lower claims costs. But it could go much higher if the group has higher claims costs.
The same is true of AHPs, but under the law, health carriers can work with an association to design a plan tailored to that group, including wellness options and other incentives to be healthy. This allows the (smaller) group to control health care costs better and allows greater flexibility.
So where is this all leading?
Two bills just introduced in Olympia, House Bill 1712 and House Bill 1714 aim to remove the flexibility in the law that AHPs enjoy. Why? The bills’ sponsors believe that AHPs are rating out bad risks and only keeping good ones. Yet, if that is true why has enrollment in AHPs across the state increased substantially? We believe these accusations are false and efforts to intercede in the Association health plan market will mean dramatic rate increases.
The members of the technology industry who receive insurance through an AHP are generally pleased with the variety of plans they are offered, and the pricing of these plans relative to alternatives. Several hundred companies get insurance through the WTIA and this allows them to compete successfully for employees who are often being wooed by larger companies (with very attractive benefit packages). These proposed bills will eliminate both rating flexibility and other incentives to keep health care premiums low — with a direct result of higher insurance premiums.
These bills are classic examples of how the personal views of legislators — not the needs or wants of small businesses – get translated into bad policy.
At a time when we need to nurture our innovation economy — when small technology businesses are worrying about finding their next customer or next round of investment, we don’t need the “help” of the legislature on this issue. We need their help to maintain investments in higher education for engineering and science degrees, strong math standards for kids so they’ll be prepared for the innovation economy, broadband access across the state so everyone can participate in the technology economy, among many other efforts.
We don’t envy the difficult job ahead for the legislature this year and we know that they are working hard through the difficult tradeoffs. Let’s not let personal priorities replace public good at this critical time.
To find out more information about the specific bills or to communicate directly with the house members considering this bill on Friday afternoon. If you would like to testify at the hearing, please contact WTIA’s Lew McMurran at Lmcmurran@washingtontechnology.org or at 206-448-3033 x101.